Buying a television set will soon become costlier In India as the 5 percent customs duty on open-cell panels has been re-imposed from October 1st. The Central Board of Indirect Taxes and Customs (CBIC) said in a notification that the zero customs duty for open-cell panels, valid between September 2019 and 2020, had come to an end on September 30. As part of ‘Atmanirbhar Bharat’, the government is keen to expand domestic production capacity for open cell panels as it seeks to curb imports.
Ahead of the festive Diwali season, the customs duty re-imposition is likely to lead to an immediate price hike in televisions as open-cell panels are used in manufacturing LCD/LED screens for televisions. Note that TV panel prices are already on the rise since manufacturers increased prices by 20-25 percent since September.
About 60-65 percent of the price of the television is the cost of the open-cell panel that makes the screen. There is no local manufacturing of open cells in India which is why the component is imported.
Industry body Consumer Electronics and Appliances Manufacturers Association or CEAMA said the move will add pressure on the industry that is already struggling from COVID-induced pressure on consumer demand.
That apart, there is also a shortage of 43-55 inch TV sets in the markets due to a shortage of components such as panels.
“The resumption of customs duty on Open Cells will put added pressure on the TV industry which is already reeling under stress due to COVID. This may make domestic manufacturing uncompetitive and expensive. Open-cell panels form nearly 65% of the total production cost of television and the imposition of duty may have an impact on the overall pricing of TVs,” said Kamal Nandi, president, CEAMA, and business head & EVP, Godrej Appliances.
Note that as per officials, leading brands import Open Cell for a basic price of Rs 2,700 for a 32 inch and about Rs 4,000 to Rs 4,500 for a 42-inch television. The impact of 5% duty on Open Cell would, thus, is not likely to be more than Rs 150-250 for a television. Television makers were hopeful of a temporary extension till the end of December, to see them through the festival season. However, no extension has been announced by the government.
It is worth mentioning that last year in September, the CBIC announced that there would not be any customs duty applicable to open-cell panels after requests from television makers. The body, however, clarified that manufacturers must work towards developing domestic manufacturing capacities. Despite the clarification, TV manufacturers were unable to set up local manufacturing capacities for panels in this one-year duration since the coronavirus outbreak and subsequent lockdown also hampered these plans.
Since there is no local manufacturing of open cells in the country which is why the entire component is imported from markets such as China and Vietnam. These raw open cells are imported and are then assembled in India.
Meanwhile, the Centre has also restricted entry through designated ports to monitor imports ever since the China-India border standoff. This has led to at least 21,700 TV sets of 75 inches and above stuck at various ports, pending DGFT clearance.
“About Rs 500-600 crore worth of goods may be stuck in various ports and consignments currently in high seas which can lead to piling up of goods in transit, said ICEA Chairman Pankaj Mohindroo, urging that the import restrictions should only apply for future imports after the clearance of goods in transits.
Moreover, in a move aimed at promoting domestic manufacturing, the government in July decided to license the import of fully-built televisions sets by putting them on the “restricted” list.
The unavailability of import licenses for high-end television sets and blocking of foreign goods into the country, especially those from China, may derail crucial festive plans.
Companies like Xiaomi, LG, Sony, TCL, Vu, and Samsung have no immediate plans to set up fresh production lines in India for big-screen premium models and most have instead applied for import licenses. However, there isn’t much clarity so far about when they will get them, meaning TV sets of 80 inches and above could be missing from both offline and online stores during the sale season that will begin in late October, fear industry executives.
Currently, TV is one of the larger segments under the entire domain of Appliance and Consumer Electronics, accounting for 1.7 crore units, with an estimated worth of almost Rs. 25,000 crore. Televisions worth Rs 600-700 crore are imported into India every month. Official data shows that as much as $ 781 million worth of TVs were imported in 2019-20. Of this, $428 million was from Vietnam and $ 293 million was from China.